March 2018

Residential Real Estate

Is Commercial Real Estate Different Then Residential Real Estate?


A common definition of a commercial property is “any piece of real estate that is larger then one house on one lot.” Therefore commercial real estate includes everything from tiny 2 unit apartments to large shopping centers and even the development of land. Here are the 2 biggest differences between residential real estate and commercial real estate.

1. Commercial properties can be passive investments only once they are off the ground and running smoothly. Unless you have massive amounts of money and do not care about getting huge returns, commercial real estate will eat up both your time and money. When you enter commercial real estate investing you will have to deal with the learning curve, finding a good mentor or coach, finding financing, overseeing the project, hiring a good law staff and finally finding the right property to purchase in the first place. The good news is once you have your property up and running, then they normally makes enough money for you to sit back and pay others to manage it.

2. Investing in commercial properties has the ability to make you wealthy with the completion of just one deal. By completing one commercial deal in the correct manner you can profit with a healthy chunk of cash that might be worth several times your yearly salary as well as adding a decent monthly income to your current income. Residential property does have the potential to build wealth, but it does not have nearly the cash flow potential of commercial investments.

What it comes down to is how a person thinks. If you want to live big then you need to think big. Don’t think about how you can start small with a small house on a small lot and earn a small cash flow. Rather think about how big you can go while still managing the risks in an appropriate manner. You may not have the ability to purchase a skyscraper in your first deal, instead try setting your sights on a decent sized strip mall. Instead of a $1,200 a month check from your renter of the single family home, think about the $50,000 a month worth of checks you could receive from your strip mall. Think big and the profits you receive could potentially be enormous.


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Shadow Inventory – What Is It and How to Find It

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Many Investors have been asking me about shadow inventory how much is out there and how to get their hands on it. Shadow inventory usually refers to the supply of homes that has not yet hit the market, but “hiding” in the background. In Real Estate this refers to foreclosures (REO or bank owned properties) or those close to the process.

Banks and mortgage loan servicing companies typically hold onto properties that haven’t seen a mortgage payment for 90 days and in some cases even 2-3 years.

Why do they hold on so long?

Banks hold on since it allows them to release their inventory over time to keep their books in check and also to provide that easy liquidation to stimulate the real estate economy when necessary. Banks will now be getting more money for those newly released properties, then say 2 years ago, due to the steady increase in home prices and low inventory levels. If they chose to release all at once, it would flood the market with “distressed properties” and bring down property values.

How much “Shadow Inventory” is still out there?

Foreclosures have been steadily declining since 2013 with the highest shadow inventory then at 2.2MM. According to the National Association of Realtors, there is still about 4 years still on the books and it is possible that we could soon see more!

More “Shadow Inventory”? Why? (HAMP) Home Affordable Modification Program

In 2017 and beyond, many homeowners may find it difficult to make their mortgage payments due to “resets” with HAMP thus pushing them into foreclosure. The government’s Home Affordable Modification Program provided temporary relief to borrowers during the housing crisis. These reliefs ended after five years and now payments will be “reset” thus causing loan payment increases for nearly 900,000 homeowners. Some of those are likely to find it difficult to keep up with the payments in our current economy.

Where do Investors find “Shadow Inventory”?

Forget about calling the loss mitigation department or asking the cashier at your Big Bank. They won’t be able to help you. Instead, savvy real estate investors can approach the REO departments of smaller regional banks, credit unions and portfolio lenders to find out what could be “lurking” in the shadows. This presents an opportunity to beat out the competition and purchase at greater discounts.

But my favorite way to locate “Shadow Inventory” is what I call “Driving forDollars”. Simply drive through areas that have high foreclosure activity and look for the white sticker posted on the front window or door of the house. This typically contains the information of the bank or asset manager of the property and their phone number. Give them a call and see where they are in the foreclosure process and if they’re ready to make a deal!

The NEW kind of “Shadow Inventory”!

There is a new kind of shadow inventory on the market these days and I’m not talking about the REO kind. Many successful agents have their own shadow inventory. If you’ve been in the business for an extended period and built up a clientele, these clients typically contact you well in advance of the property going on the market. You advise them of the steps needed to get the house ready to show which typically means doing repairs such as paint, carpet, landscaping, staging, etc. Therefore, there is a period of time before the property actually hits the market creating a different type of shadow inventory. Contacting your favorite realtor about this type of inventory can definitely increase your chances of finding that Dream home.

Happy House Hunting!

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How Do You Know If You Need to Hire a Moving Company?

14 Questions to Ask a Moving Company Before You Hire Them

No matter how you put it, there is nothing calming about getting up and moving your family and all your belongings to a new location. You are already worrying about your family members, the pets, new schools, and a potentially new work place; not to mention the heaping pile of boxes that aren’t going to pick themselves up. I wrote this article as sort of a list of questions to ask yourself in order to decide if you need to hire a moving company for your big day.

If you are planning or in the process of moving, one of the last things you really want to think about is the mass amount of things in your home. However, it may be the most important thing to consider when deciding whether or not to hire a moving company. You need to consider the amount of items you have, and the weight of them as well. A great moving company will supply you with a crew that can help you to organize your belongings, box them up, and haul them out of the old home. With specially designed trucks, you wouldn’t have to worry about the handling of your objects compared to you just stuffing your items in the back seat of your car. And especially if you are moving a long distance away, you will need the help of a trustworthy crew while you relax the whole way to your new home. Of course, as soon as you get there, you can expect your moving crew to unload the truck and yet again, allow you to relax and focus on where you want your strong movers to place your things.

If you are a business owner and you are planning to move your office to another location, you may be under a lot more stress than someone who is only moving their home and family. Like any business owner, if you need to keep your company’s productivity level high during the move, you may need to hire a moving company. In this case, a moving consultant should be hired who will take care of every aspect of the moving process. My father moved his company a year ago from Auburn, California to 20 miles down the freeway. He not only needed the entire office to be cleaned out and relocated, but a warehouse with hundreds of thousands of products to come along as well. With the help of a local moving company in Auburn, he was able to work to his full potential while his moving crew did the heavy lifting and relocating. He also mentioned that when they got to the new office, the crew had boxed and wrapped delicate items to ensure their safety. When the final items had been unloaded from the moving truck, they realized that not everything was going to fit in the new office, but not to worry; my father’s moving crew offered him storage for the overflow, and they were in a storage unit by the end of the day.

For all the stress-prone folks out there, don’t try and move without help. If you don’t know what you are getting yourself into entirely, let me tell you; moving is stressful! If you need to ease your tensions during hectic times, you probably need to hire a moving company. During my Dad’s Auburn move, he said specifically that the moving crews’ professional, positive and humorous attitudes made for an easy and comfortable move. A great moving company will send a crew that shows up on time, and gets your work done in a timely manner because they understand that your time is precious, and they don’t want to waste it.

Before deciding on any moving company, make sure you do your research online. If you have an excess amount of things, or if you are a business owner, or if you are just a worry-wart, you may need to hire a moving company. With this extra help, you are sure to have an easy and stress-free move.


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